Absolute Breadth IndexThe absolute breadth index (ABI) is an oscillator developed by Norman G Fosback. The oscillator is used to measure the market volatility. The indicator gives you the absolute value of the difference between the advancing issues and the declining issues. In other words you can see the difference between stocks that are going up and stocks that are going down. This shows you how much volatility, activity, and change is taking place in the market. The formula simply looks like this. ABI = (Number of Advancing Stocks - Number of Declining Stocks) This is an absolute value of the number of shares that are making bullish and bearish runs. As a result the number will always be positive even if there are more declining stocks then rising stocks. Below is an example of how the ABI looks on a chart. 
If the indicator has a small value that means there is not much that is taking place in the market as a whole. So the markets are not really bullish or bearish. A fast pace choppy line on the indicator shows that the markets are choppy and are having a hard time making a trend. When the indicator is above 40% it is a bullish signal. When the indicator is below 15% it is a bearish signal for the stock. Because it is a measure of volatility the absolute value index can show you when it is hard to trade. Anything between 15 and 40% should not be traded according to this indicator. Other Oscillators There are a variety of other oscillators which can indicate changes in the market. Here are a few of them and what they do. Detrended Price Oscillator - This looks for short term overbought and oversold areas. Accumulative Swing Index - This indicator looks at the longer term trend of a stock. Rate of Change - This indicator looks at the rate which a stock is changing.
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